EXHIBIT 99.1
NEWS RELEASE
Contact: James Hasty
Corporate Controller
(256) 747-8589
SOUTHERN ENERGY HOMES, INC. REPORTS
THIRD QUARTER 2002 RESULTS
ADDISON, Ala. -- October 17, 2002 -- Southern Energy Homes, Inc. (Nasdaq: SEHI)
today reported its results for the third quarter ended September 27, 2002. Net
revenues from continuing operations were $35.0 million compared with $34.1
million in the same quarter of 2001. Income from continuing operations for the
third quarter of 2002 was $419,000, or $0.03 per diluted share, compared with
$551,000, or $0.05 per diluted share, in the third quarter of 2001. Net loss for
the 2002 third quarter was $2.9 million, or $0.24 per diluted share, which
reflects a loss from discontinued operations of $3.3 million ($0.27 per share),
net of a $1.8 million tax benefit. This compares with a net loss of $271,000, or
$0.02 per diluted share, in the third quarter of 2001, which includes a loss
from discontinued operations of $822,000 ($0.07 per share).
"We recently announced our plans to close the majority of our 10 remaining
retail centers to improve Southern Energy's overall profitability, focus on
further improvements to manufacturing and enhance our service to our independent
dealer network operating in 22 states," stated Keith O. Holdbrooks, chief
executive officer of Southern Energy Homes. "Our retail centers, including those
reported in discontinued and continuing operations, had a pre-tax loss of
approximately $7.9 million in the first nine months of this year. In contrast,
manufacturing segment income rose over 17% to $4.4 million for the same period.
We believe our strategy of focusing on manufacturing operations will improve our
future profitability.
"Southern Energy's third quarter sales from core manufacturing operations were
down 0.4% from last year despite the pressure of lower sales from our retail
centers and the weakness in the economy. Sales to our independent dealers were
up 15.6% in response to our improved quality and increased focus on dealer
service. Sales from our component supply and consumer finance businesses showed
modest growth from last year. By comparison, retail sales, including those from
discontinued operations, were down 47% from the third quarter of last year.
"Our financial position continues to strengthen as we reduce debt and
inventories," continued Mr. Holdbrooks. "At the end of the third quarter, we had
no long-term debt and $4.2 million in short-term notes payable. Over the last
nine months, we have reduced short-term notes payable by $6.7 million and
inventories by $7.4 million to significantly strengthen our balance sheet."
THIRD QUARTER RESULTS
Net revenues for the third quarter increased to $35.0 million compared with
$34.1 million in the third quarter of 2001. Manufacturing revenue declined 0.4%
to $33.9 million, retail operations were down 47.2% to $5.0 million, and
component supply revenue was up 8.0% to $6.7 million. Sales from discontinued
operations were $3.5 million for the third quarter of 2002 and $7.1 million for
the third quarter of 2001.
Total wholesale homes shipped in the third quarter of 2002 were 1,082, a decline
of 5% from 1,143 sold during the same period of 2001. Average sales price for
wholesale homes in the third quarter of 2002 was $29,545, an increase of 5% from
$28,113 during the same period of 2001. Total retail homes sold from continuing
operations in the third quarter of 2002 were 52, down 40% from 86 homes sold
during the same period of 2001. Average sales price for new retail homes from
continuing operations in the third quarter of 2002 was $51,121, an increase of
17% from $43,525 during the same period of 2001. The increase in average sales
price was due to more expensive homes being sold and more land home sales, which
carry a higher sales price.
The decline in retail revenue reflects the closure of 12 company-owned retail
centers in the last 12 months and increasing difficulty for buyers to qualify
for financing of manufactured homes as a result of the withdrawal of several
lenders from our markets, which made it more difficult for customers to make
purchases.
Gross profit was $7.7 million in the third quarter of 2002 compared with $8.6
million in the same period of 2001. Manufacturing gross profit increased 22.0%
to $6.1 million, retail declined 56.5% to $1.2 million, and component supply
increased 22.7% to $0.6 million. Gross profit from discontinued operations was
$0.2 million in the third quarter of 2002 compared with $0.8 million in the
third quarter of 2001.
Operating expenses declined to $7.1 million, or 20.4% of revenues, compared with
$7.6 million, or 22.4% of revenues, in the third quarter of 2001.
Income from continuing operations was $0.4 million in 2002 compared with $0.6
million in 2001. The loss from discontinued operations totaled $3.3 million in
the third quarter of 2002, which includes a tax benefit of $1.8 million,
compared with a loss of $822,000 in the third quarter of 2001. The third quarter
pre-tax charge relating to the retail center closures includes approximately
$3.2 million to write-down the carrying value of unsold homes in current retail
inventory, and $1.4 million for leasehold, severance and equipment- related
costs. The Company anticipates that the home inventory from the closed centers
will be sold to independent dealers and through Southern Energy's remaining
retail centers.
NINE-MONTH RESULTS
Net revenues for the first nine months of 2002 rose to $106.7 million compared
with $96.8 million in the same period of 2001. Manufacturing operations
contributed $102.2 million in 2002, up from $99.6 million in 2001. Retail
operations totaled $17.9 million, down from $33.1 million in 2001. Sales from
discontinued operations were $11.7 million for the first nine months of 2002 and
$24.3 million for the same period of 2001.
Gross profit for the first nine months of 2002 was $23.0 million compared with
$23.6 million in the same period of 2001. Manufacturing operations was the major
contributor to gross profit in 2002 with $17.8 million, followed by retail
operations with $4.1 million, and component supply with $1.7 million.
Operating expenses for the first nine months of 2002 were $20.9 million compared
with $22.3 million in the same period of 2001. Income from continuing operations
was $1.5 million in 2002 compared with a loss of $83,000 in 2001. Loss from
discontinued operations was $4.9 million (net of $1.8 million tax benefit) for
the first nine months of 2002 compared with a loss of $1.5 million in 2001. Net
loss for the 2002 period was $3.4 million, or $0.28 per diluted share, compared
with the 2001 net loss of $1.6 million, or $0.13 per share.
ABOUT SOUTHERN ENERGY HOMES, INC.
Southern Energy Homes, Inc. operates five home manufacturing facilities in
Alabama and Texas, three retail sales centers and three supply companies, all in
Alabama. Currently marketed under four brand names, the Company's homes are sold
in 22 states. In addition to its manufacturing, retail sales and component
supply operations, the Company's operations also include finance and insurance
segments.
Forward-looking statements in this news release, including without limitation,
statements relating to the adequacy of the Company's resources, are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that such forward-looking statements
involve risks and uncertainties, which could cause actual results to differ
materially from those in any forward-looking statements, including without
limitation: the ultimate financial and operational effects of discontinued
operations being undertaken; general economic conditions; the cyclical and
seasonal nature of housing markets; competitive pricing pressures at both the
wholesale and retail levels; changes in market demand; the impact of cost
reduction programs and other management initiatives; availability of financing
for prospective purchasers of the Company's homes and availability of floor plan
financing for dealers; performance of the loans held by the Company's finance
subsidiary; availability and pricing of raw materials; concentration of the
Company's business in certain regional markets; adverse weather conditions that
reduce retail sales; the possibility of plant shutdowns from weather or other
causes; availability of labor for the Company to meet operating requirements;
the highly competitive nature of the manufactured housing industry; federal,
state and local regulation of the Company's business; the Company's contingent
repurchase liabilities with respect to dealer financing; the Company's reliance
on independent dealers; and other risks indicated from time to time in the
Company's filings with the Securities and Exchange Commission.
SOUTHERN ENERGY HOMES, INC.
UNAUDITED FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Thirteen Weeks Ended
-----------------------------------
Sept. 27, 2002 Sept. 28, 2001(1)
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Net revenues $ 35,026 $ 34,067
Operating income 573 946
Income from continuing operations 419 551
Loss from discontinued operations (net of $1.8 (3,286) (822)
million tax benefit)
Net loss (2,867) (271)
Basic and diluted earnings per share:
Income from continuing operations 0.03 0.05
Loss from discontinued operations (0.27) (0.07)
Net loss (0.24) (0.02)
Weighted average shares outstanding:
Basic 12,133,865 12,133,350
Diluted 12,386,841 12,458,800
Thirty-nine Weeks Ended
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Sept. 27, 2002 Sept. 28, 2001(1)
-------------- --------------
Net revenues $ 106,739 $ 96,785
Operating income 2,091 1,267
Income (loss) from continuing operations 1,467 (83)
Loss from discontinued operations (net of $1.8 (4,877) (1,524)
million tax benefit)
Net loss (3,410) (1,607)
Basic and diluted earnings per share:
Income (loss) from continuing operations 0.12 (0.01)
Loss from discontinued operations (0.40) (0.12)
Net loss (0.28) (0.13)
Weighted average shares outstanding:
Basic 12,133,865 12,133,109
Diluted 12,301,516 12,133,109
Note: In the third quarter of 2002, the Company made the decision to discontinue
the operations of seven retail centers. Accordingly, the Company has classified
the operating results of the seven retail centers in the third quarter of 2002
and 2001 as discontinued operations.
(1) Data for the thirteen and thirty-nine weeks ended September 28, 2001 have
been restated to reflect the operating results of retail centers closed in the
fiscal 2002 as discontinued operations.
SOUTHERN ENERGY HOMES, INC.
SUMMARY OPERATING FACTS
Thirteen Weeks Ended
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Sept. 27, 2002 Sept. 28, 2001(1)
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Number of company-owned retail centers
(continuing operations) 3 4
Retail units sold:
New single-section 7 15
New multi-section 24 49
Used homes 21 22
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52 86
Wholesale units sold:
External customers 1,031 985
Intercompany 51 158
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1,082 1,143
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Total homes sold 1,134 1,229
Internalization (2) 100% 98%
Average sales prices - retail (new) $51,121 $43,525
Average sales price - wholesale $29,545 $28,113
Floor sections produced 1,842 1,917
Thirty-nine Weeks Ended
------------------------------------
Sept. 27, 2002 Sept. 28, 2001(1)
-------------- --------------
Number of company-owned retail centers
(continuing operations) 3 4
Retail units sold:
New single-section 15 33
New multi-section 92 158
Used homes 60 76
------- -------
167 267
Wholesale units sold:
External customers 3,135 2.803
Intercompany 137 533
------- -------
3,272 3,336
------- -------
Total homes sold 3,439 3,603
Internalization (2) 99% 96%
Average sales prices - retail (new) $51,642 $46,402
Average sales price - wholesale $29,432 $28,208
Floor sections produced 5,667 5,681
(1) Summary operating data for the thirteen and thirty-nine week ended
September 28, 2001 have been restated to exclude discontinued
operations of retail center closures in 2002.
(2) Represents the percentage of new homes sold at retail that are also
manufactured by the Company.